It's been a logical question for quite some time now: Is Deckers Outdoors'
Deckers' fourth-quarter net income increased 189% to $35.4 million, or $2.72 per share, but bear in mind that last year, Deckers reported a $15.3 million impairment loss which dragged down its quarterly earnings. Fourth-quarter revenue increased 56% to $194.2 million.
The UGG brand of clunky sheepskin boots and other footwear is still incredibly important to Deckers. During the quarter, UGG's sales increased 61.8% to $177.7 million; Teva sales rose only 6.8%. Last but not least, Deckers' eco-friendly Simple brand showed impressive growth -- a 76.2% increase. But it's hard to get excited about such a tiny part of the business; Simple's sales added up to just $2.6 million.
However, in the Deckers conference call, management pointed out that Simple is in interesting and exciting distribution channels like Whole Foods Market
Deckers gave some lackluster guidance, which seems to have helped drive shareholders to shun the shoe stock. Deckers said it will generate earnings of about $0.75 per share in the first quarter, while analysts expect $0.92 per share.
I can't blame anybody for cold feet. Deckers has been on an incredible upward trajectory for quite some time. (Its stock is up 72% over the last year.) And like fellow footwear venture Crocs
Deckers is trading at 24 times 2008 earnings, but it only expects 20% earnings growth this year (with decreasing gross margin). That sounds somewhat overvalued, and even given the argument that this might be "conservative" guidance, the question remains as to whether Deckers' recently heady growth is sustainable. Personally, I'd rather see cheaper shares before slipping on some Deckers.